Shares of social media giant Facebook fell on Wednesday after the stock got its first downgrade since January.
Research firm OTR Global cut its rating to mixed from positive, amid concern that year-over-year growth in advertisement spending moderated in the first quarter of 2018. The last downgrade of the stock prior to OTR was made by Stifel Nicolaus’s Scott Devitt in January, before the scandal involving Cambridge Analytica.
The company’s first-quarter advertising spending is likely to rise 19%-24% year on year in the first quarter, versus a gain of as much as 30% in the fourth quarter, OTR said. Facebook lost 10% in March amid concern over the way the company handled its users’ personal data.
OTR is not beholden to traditional industry coverage. The research team uses information gathered through methods including interviews with industry experts, client events and company filing reviews, according to the firm’s website.
Earlier on Wednesday, Goldman Sachs analyst Heather Bellini said the social media giant was likely to report another solid quarter after checks with advertising partners were strong. The company is due to report earnings on April 25.
Facebook shares fell as much as 1.7% on Wednesday, heading for their first loss in four days. The stock has added 3.9% in April, narrowing its decline since mid-March to 10%. Options traders have taken notice of the stock rebound: the cost of protecting against declines in Facebook shares are at the lowest level since February, before the Cambridge Analytica scandal roiled the stock in March.
Bloomberg
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